Avoiding Reverse Mortgage Scams

Avoiding Reverse Mortgage Scams

Avoiding Reverse Mortgage Scams
Reverse mortgages are gaining in​ popularity as​ more senior's start looking for ways to​ supplement their retirement incomes .​
And as​ the​ interest in​ reverse mortgages increase,​ so are the​ cases of​ reverse mortgage fraud and scams .​
Many seniors are finding that they have lost thousands dollars of​ their hard earned equity to​ these reverse mortgages scams .​
Since reverse mortgages typically involve our largest asset (your home),​ this type of​ fraud can have a​ serious negative impact on​ your retirement .​
The following reverse mortgage fraud information will help you​ avoid becoming a​ victim of​ a​ reverse mortgage scam.
Reverse Mortgage Scams
The are several types of​ reverse mortgage scams that can end up costing you​ thousands and even tens of​ thousands of​ dollars in​ equity in​ your home if​ you​ become a​ victim.
Charging for free information on​ reverse mortgages

Several estate planning companies have been charging thousands of​ dollars for information provided free from HUD .​
Typically these companies charge for this information as​ part of​ an​ estate planning program .​
Seniors that sign up for these programs are unaware that these firms are collecting thousands of​ dollars by charging a​ fee of​ 6 to​ 10 percent of​ the​ total amount borrowed .​
These fees costs the​ victims $6,​000 to​ $10,​000 on​ a​ $100,​000 reverse mortgage .​
HUD has recently issued a​ directive to​ lenders that issued reverse mortgages insured by the​ Federal Housing Administration (FHA) to​ stop doing business with these companies.
Pushing reverse mortgages as​ a​ way to​ pay for purchases
Some companies that sell large ticket items or​ services,​ like annuities or​ insurance products,​ may try to​ suggest using a​ reverse mortgage as​ a​ way fund these purchases .​
When the​ additional cost of​ the​ reverse mortgage is​ factored into the​ purchase,​ it​ ends up costing the​ homeowner much more than the​ benefit provided by the​ product or​ service .​
Unethical reverse mortgage terms
Some lenders slip in​ excessive fees and terms into their contracts .​
These terms can have a​ serious effect a​ Seniors equity .​
In some cases,​ lenders have used shared equity or​ shared appreciation terms,​ which gives the​ lender the​ right to​ collect a​ portion of​ the​ appreciation when the​ home is​ sold or​ refinanced .​
The cost of​ these type provisions can run into the​ tens of​ thousands as​ the​ home appreciates .​
These rising cost provisions eat up equity without providing any additional benefit to​ the​ homeowner .​
Protecting yourself from reverse mortgage scams
If you​ are looking into reverse mortgages,​ there are several things that you​ can do to​ protect yourself from falling victim to​ these types of​ scams .​
1 .​
Speak with a​ HUD approved reverse mortgage counselor .​
The counselor will help you​ understand reverse mortgages and help you​ evaluate your situation.
2 .​
Obtain several offers from different reverse mortgage lenders in​ order to​ compare different options .​
The rule of​ thumb is​ to​ get at​ least three
separate offers so that you​ have a​ good comparison of​ the​ terms offered.
3 .​
Make sure you​ understand all the​ terms and conditions within the​ reverse mortgage contracts .​
Your reverse mortgage counselor can guide you​ through
the contracts.
4 .​
You generally have three business days after signing the​ loan document to​ cancel it​ for any reason.
If you​ suspect that a​ company is​ operating in​ violation of​ the​ law,​ let your reverse mortgage counselor know and then file a​ complaint with your State Attorney General's office or​ banking regulatory agency and the​ Federal Trade Commission (FTC) at​ www.ftc.gov.

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